Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO2 emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage' as shown in the table below. The first line of figures in the table relates to qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2009/10 remains at £16,900.

The percentages are reduced for cars (except QUALECs) that can be driven on alternative fuels by:

• 2% for cars manufactured to be capable of being run on E85 fuel
• 2% for bi-fuel cars or those which run on LPG only
• 3% for hybrid electric and petrol cars
• 6% for electric only cars (in practice the taxable benefit will be 9% of the price).
  

CO2 emissions (g/km) Appropriate percentage Quarterly VAT Petrol % Diesel % Fuel scale charge £ VAT on charge £ (15%) £ (17.5%) 120 and below 10 13 126 16.43 18.76 121 - 139 15 18 189 24.65 28.14 140 - 144 16 19 201 26.21 29.93 145 - 149 17 20 214 27.91 31.87 150 - 154 18 21 226 29.47 33.65 155 - 159 19 22 239 31.17 35.59 160 - 164 20 23 251 32.73 37.38 165 - 169 21 24 264 34.43 39.31 170 - 174 22 25 276 36.00 41.10 175 - 179 23 26 289 37.69 43.04 180 - 184 24 27 302 39.39 44.97 185 - 189 25 28 314 40.95 46.76 190 - 194 26 29 327 42.65 48.70 195 - 199 27 30 339 44.21 50.48 200 - 204 28 31 352 45.91 52.42 205 - 209 29 32 365 47.60 54.36 210 - 214 30 33 378 49.30 56.29 215 - 219 31 34 390 50.86 58.08 220 - 224 32 35 403 52.56 60.02 225 - 229 33 35 416 54.26 61.95 230 - 234 34 35 428 55.82 63.74 235 and above 35 35 441 57.52 65.68

Changes from April 2011

The Chancellor announced changes which will take effect from 6 April 2011:

• the lower emissions figure will be reduced
• the £80,000 price cap will be abolished
• the reductions for cars using various alternative fuels will be abolished.

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge.

The table above shows the VAT chargeable for quarters commencing on or after 1 May 2009. The last two columns take account of the change of the standard rate of VAT from 15% to 17.5% with effect from 1 January 2010.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates at the time of the Budget are as follows:

Vehicle First 10,000 miles Thereafter Car / Van 40p 25p Motorcycle 24p 24p Bicycle 20p 20p

Car - fuel only advisory rates Engine Capacity Petrol Diesel LPG Up to 1400cc 10p 11p 7p 1401 - 2000cc 12p 11p 9p Over 2000cc 17p 14p 12p

The fuel only advisory rates relate to company cars only. They can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys.

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

Car costs – Vehicle Excise Duty (VED) rates

Vehicle Excise Duty ('Car Tax') rates also reflect emissions, with lower scale rates for cars using alternative fuels. The number of VED bands has been increased from seven to 13. The following table shows the rates which will apply for cars registered on or after 1 March 2001:

VED Band CO2 emissions (g/km)         From 1 May 2009 From 1 April 2010 Petrol & Diesel Alternative fuel cars Petrol & Diesel Alternative fuel cars A Up to 100 £0 £0 £0 £0 B 101 – 110 £35 £15 £20 £10 C 111 – 120 £35 £15 £30 £20 D 121 – 130 £120 £100 £90 £80 E 131 – 140 £120 £100 £110 £100 F 141 – 150 £125 £105 £125 £115 G 151 – 165 £150 £130 £155 £145 H 166 – 175 £175 £155 £180 £170 I 176 – 185 £175 £155 £200 £190 J 186 – 200 £215 £200 £235 £225 K* 201 – 225 £215 £200 £245 £235 L 226 – 255 £405 £390 £425 £415 M Over 255 £405 £390 £435 £425 * includes cars emitting over 225g/km registered between 1 March 2001 and  23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £500 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van Fuel Total Tax (20% taxpayer) £600 £100 £700 Tax (40% taxpayer) £1,200 £200 £1,400 Employer’s Class 1A NICs £384 £64 £448